Gift Aid on small donations available only to charities registered for three years

Organisations must demonstrate tax compliance to claim relief on amounts up to £5,000 without declarations, HM Revenue & Customs says

HM Revenue & Customs
HM Revenue & Customs

The new small donations scheme announced in the Budget will be open only to charities that have complied with tax rules for at least three years, HM Revenue & Customs has confirmed.

The new scheme, which will allow charities to claim Gift Aid on donations worth £5,000 each year without a Gift Aid declaration, was announced in the Budget on Wednesday. It will come into force in April 2013 and requires primary legislation to be passed next year.

The three-year limit is designed to prevent fraud, according to HMRC.

"Being registered for Gift Aid for at least three years will enable charities to demonstrate that they are compliant and conduct their affairs professionally," said a spokesman for HMRC.

It was expected, he said, that the scheme would be open only to charities that have filed tax returns and paid their taxes on time.

Claims will be made through an online Gift Aid claims system, which was also announced in the Budget.

The scheme is intended specifically to help small organisations, according to the spokesman.

"The administrative burden of collecting and dealing with Gift Aid declarations is often a deterrent to charities that receive a high volume of small donations," he said. "This scheme enables charities to claim a Gift Aid-type payment on small amounts without needing to maintain detailed records."

Consultations on how the legislation will work will take place later this year, he said.

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